March 2022 Housing Market Update | What You Need To Know
With sky-high prices still making headlines in many markets, including our own here in San Antonio, fears of a housing bubble are still top of mind. But let’s take a closer look at what is happening now in the housing market vs what happened in 2007.
As you can see above many consumers and even some real estate agents believe there is a housing bubble where they live. And this may be the case for certain markets around the country. But here I will focus on the local market of San Antonio TX.
Yes, prices have spiked in a short amount of time and are in some cases uncomfortably high. But how we ended up with high prices this time around is completely different than price hikes that led to the 2007-2010 housing crash.
Why did the housing market crash in 2008?
In the years leading up to the housing crash subprime borrowers and loose appraisal, practices drove the pricing to high levels, and when the subprime borrowers defaulted the market collapsed.
In this new run-up on prices borrowers are highly qualified, appraisal valuations are tight and home equity is at all-time highs. So, if homeowners do get in trouble they can likely sell and walk with a profit.
Will Home Prices Go Up In 2022?
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To answer that question we have to first look at what our acceleration rate is and why first. Is the rate increasing, decelerating, decelerating, or depreciation? We can quickly see by looking at the graph below which direction we are heading in 2022 with the data we have now.
From Jan 2021-July 2021 we saw some of the highest acceleration in appreciation rates as home buyers snapped up homes quickly.
While I believe the highest rate of price acceleration is behind us, 2022 has started the year with more price acceleration in January. I will explain a little further down here why that is.
New Listings Fall Dramatically
First, we have to look back at the new listings numbers reporting over the last several months. And we can see very clearly that across the country fewer and fewer homeowners are putting their homes on the market.
We can all hope this is just the seasonality of real estate returning to normal but with already low inventory levels well below pre covid, we are starting the year behind schedule. Add in the high demand of buyers that exist and we have a recipe for more upward pressure on prices this year.
Bexar County New Listings In February
In local inventory news, more new listing inventory was reported this February than in the previous year. Not as much as there was in 2020 but we can hope this is the start of some better news for home buyers.
source: San Antonio Board Of Realtors
Housing Demand 2022
When it comes to measuring how strong housing demand is at any given time. You can look at several indicators in the market. One indicator we will look at now is ‘active listings’.
When housing demand is weakening ‘active listing’ numbers tend to trend higher as homes move from ‘new’ status to ‘active’ status. Conversely, as housing demand strengthens ‘active listing’ numbers trend downward as buyers scoop up homes before the status changes from ‘new’ to ‘active’
The above graph shows the active listing activity across the country as a whole and the graph below shows local Bexar County active listing activity.
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Bexar County Listings in February
Much like the rest of the country in December Bexar County saw fewer active listings in February. This indicates a strong buyer demand in our area adding downward pressure on inventory and upward pressure on pricing.
source: San Antonio Board Of Realtors
Bexar County is -17.6% inactive listing this year in February and minus more than 50% than February in 2020.
Bexar County Months Supply Of Homes
To further illustrate home buyer demand we can turn to the rate at which homes are sold in Bexar county. This February the home supply was recorded at 1 month supply. In a balanced market, 5-6 months of inventory would be considered ‘normal’.
source: San Antonio Board Of Realtors
Home Price Forecast 2022
And finally for the home price forecast for 2022 nationally. With 9.6 appreciation at the top and 3.0 at the low end, the expectation of more appreciation is loud and clear.
As for the local levels of appreciation, I would estimate values for the Greater San Antonio Area to be at or above the high-end of the national average for most neighborhoods.
Bottom Line
If you are a home buyer in this market wondering if the housing market will cool off or reverse course anytime soon I would caution against waiting too long. With inventory levels at such low levels any reversal in market condition will likely take many months or even a couple of years to make a meaningful difference. Any by then time and equity gains will be lost waiting for a sharp correction that never comes.
If you are a home seller in today’s market and considering making a move keep in mind that buyer desire is at an all-time high. And the chances of having multiple buyers offering favorable terms have never been better. Take advantage while you still can!